Housing sales add strength to Utah economy, boosting consumer confidence
Tom Smart, Deseret News
SALT LAKE CITY — The local housing market has become a key area of strength in the Utah economy, boosting consumer optimism by double digits over the past month.
The Zions Bank Utah Consumer Attitude Index increased by 10.4 points to 86.9 in May — the highest level since October 2012.
Nationally, the Consumer Confidence Index rose to 76.2 — up 7.2 points during the period.
Along the Wasatch Front, the real estate market has begun to show significant signs of improvement as the warm weather season approaches, said Cicero Group CEO Randy Shumway.
“We’ve consistently seen in Utah, confidence starting to creep up around the summer months,” he said. “Home prices have started to increase."
He said the inventory of homes for sale in Utah has declined by nearly 20 percent, an indication that more buyers are entering the market.
Among those who have recently taken the “home buying plunge” is West Jordan resident Warren Junium, 38. He said various economic and emotional factors prompted the married father of two to purchase a home in Daybreak about a year ago.
“Now was the time,” he said. “Rates were at a great spot, the value of a dollar was probably the highest it had been recent memory.”
Junium said they bought when they felt the market was at or near the bottom and was unlikely to fall much if at all in the future.
“We were willing to take the risk,” he said. ”We waited, we were patient and we evaluated (the market) before buying.”
He said they couldn’t be happier with their decision, especially considering the improving economy.
Nationwide, the Associated Press reported that U.S. home prices jumped 10.9 percent in March compared with a year ago, the most since April 2006. A growing number of buyers are bidding on a tight supply of homes, driving prices higher and helping the housing market recover.
The Standard & Poor’s/Case-Shiller home price index released Tuesday also showed that all 20 cities measured by the report posted year-over-year gains for the third straight month.
The national housing market is steadily recovering, buoyed by solid job gains and near-record low mortgage rates. Sales of new homes rose in April to nearly a five-year high, Shumway said. And sales of previously occupied homes ticked up in April to the highest level in three and a half years.
Utah-based home builder Holmes Homes reported that sales have jumped from a low of just 70 new units in 2011 to around 150 new units this year — which was the pre-recession average, according to vice president Jason Nageli.
"Buyers are coming off the fence," Nageli said. "They are wanting to make a move ... and are now ready to purchase a house."
The Zions Bank survey indicated that 62 percent of Utahns think their home price will increase over the next 12 months, up from 43 percent at the end of 2012. Consumer attitudes are improving due to increasing home values, a decreasing unemployment rate as well as record highs in the stock markets, Shumway said.
“Continued momentum in the housing and labor markets now appears to be outweighing the uncertainty surrounding ongoing political turmoil in Washington, as well as concerns fostered by the rise in gasoline prices earlier this year,” he said.
Last month, 52 percent of Utahns thought it was unlikely the U.S. economy would improve over the next 12 months, he noted. In May, just 39 percent think improvement is unlikely — the lowest level it has been during 2013, he explained.
The Zions Bank Consumer Attitude Index is based on a representative sample of 500 Utah households. The monthly survey is conducted by The Cicero Group/Dan Jones & Associates.
Consumers see improvement in the economy enduring in the coming months, Shumway said. The Zions Bank Expectations Index — an estimate of consumer confidence in the economy six months from now — increased 10.2 points in May to 90.1. A reading above 90 is historically consistent with a healthy economy.
The Zions Bank Present Situation Index — an assessment of confidence in current business and employment conditions — also increased in May, rising 10.6 points to 82.2. Since November 2012, Utahns have maintained substantially more confidence than have their counterparts throughout the country, he said.
This month, the Zions Bank CAI Present Situation Index sits 15.5 points ahead of the CCI Present Situation Index, and the CAI Expectations Index is 7.7 points ahead of its national equivalent.
Looking ahead, current trends indicate more months of positive economic growth in the near term, Shumway said.
"We're going to see a slow, steady improvement in confidence which will propel spending and continue to ignite our economy," he said.
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